On the RFP Process
I have personally spent countless hours responding to RFPs, and have a complicated relationship with them. They are crucial, but let's be honest, they are a real headache for both sides – those issuing and those responding.
When I was leading sales at an early stage start-up, I had mostly daunting experiences with the RFP process. I’ll highlight one experience:
I responded to an RFP by a large EHR vendor. The work description wasn't great, the company had an endless Wishlist, and did not disclose a budget or budget range. I lost the business. I asked for feedback in the spirit of learning. I got back:
A total of 22 firms bid for the project
The range of bids was $250,000 to $800,000. We bid $500,000.
The average bid landed $325,000.
The winning bid was $265,000.
No disclosure on how we scored.
This is a huge problem. The project specifications in the RFP were unclear and that resulted in a massive disparity between the lowest and highest bids. I (along with the 21 other firms) had to guess the scope and budget limits, which ended up being a resource drain for me and my CEO. While I recognize we had a choice to reply, it doesn’t necessarily mean that this process should be as difficult. There is so much room for enhancing the RFP process, making it a win-win for both sides.
I wouldn’t go so far to say that RFPs are universally dreaded everywhere (but, maybe?). I will say that the process is bureaucratic, and drowns potential suppliers in lengthy excel sheets complicating the process rather than streamlining it. RFPs fail to test suppliers for a thorough understanding of a requester’s business processes, its market, or its challenges in that market, and generally, are bogged down by unnecessary details and feature lists that overlook the real needs of the organization. This means that the business unit looking for a solution, the procurement team, and the potential suppliers have misaligned incentives.
As someone who supports 40+ startups, often helping them through the RFP process, I have seen, on more than one occasion, that large Fortune 500 companies are buying the wrong solutions because the RFP fails to address the actual business challenges. In this role, I have seen our portfolio companies get approached by large organizations responding to old RFPs that they submitted because the technology chosen did not meet the expectations of their ongoing partnerships.
Rethinking the RFP process beyond just a routine administrative chore could lead to significantly better outcomes. By focusing on strategies to attract higher-quality proposals (vs quantity), companies would likely see better outcomes and better partnerships formed as a result.
I am making a case for a business-centric RFP process:
FOCUS ON BUSINESS GOALS AND OBJECTIVES
Start with clarity. Instead of a feature-centric RFP, start with an understanding of the organization’s goals. Ask the business unit leaders, what are the key challenges? What should success look like?
Align solutions with objectives. There needs to be a clear emphasis on what goals and objectives a business leader has for their department or company that are more robust than just features.
UNDERSTAND WHY THERE IS A NEED TO CHANGE
Identify the “why”. Let’s empower our teams to do truly understand why their solutions or processes are deficient.
Communicate the “why” to potential suppliers with context. Providing suppliers with contextual information on the real issues helps them to tailor their proposals rather than guessing.
Engage with the Supplier.
Promote Collaboration. While I recognize that this process can be time consuming for all parties involved, I imagine if we increase the interaction between suppliers and clients, and encourage a flow of ideas and information. Could we encourage vendors to share how similar companies are using their technology? The process should encourage vendors to share their expertise, insight, and solutioning capability.
Remove Feature Checklists.
Problem Solving should be first. Large companies sending out RFPs need to be laser focused on how potential solutions can solve key business challenges, meets the org’s strategic goals and desired outcomes versus than the number of features they have
A redesigned RFP process can have many benefits.
If we change the approach to the RFP process in such a way that the business unit, procurement team, and potential suppliers have aligned incentives, we would encourage and invite creative solutioning to address the business problems that have been uncovered. Problem-solving and innovation are core to most startups.
Change the “What features do you offer?” question to “How would you solve this problem?”
A more targeted RFP can save everyone involved time and resources. Right now, there is a lengthy process that identifies 5-20+ suppliers required to present their solutions. If you presume that 10 people/resources take part in each demo, that is a huge chunk of manhours on all sides. However, if we focus on identifying 3-5 suppliers, encouraging more meaningful collaborations (+ building trust) between the parties, I bet that more desired outcomes will be achieved.
All in favor of revamping this process, say I! I. Transforming the RFP benefits both the issuing companies and the vendors responding, improving efficiency and promoting collaboration in the process, paving the way for a solution that genuinely meets business needs.
To my procurement teams that I am grateful to work with, have you thought about shifting the focus from a feature-driven approach to a problem-solving one?
To my sales teams, if we can get procurement to revamp the RFP process, could you commit to providing more relevant, effective solutions?